The Chamber supported the abolition of the property acquisition tax

Prague - The Chamber today supported the government's proposal to abolish the property acquisition tax in the introductory round. This is not an approval of the proposal, but its release for further readings. The four percent acquisition tax is paid by buyers and generates around 13 billion crowns annually for the state, depending on how many properties are sold in a given year. Last year, the state collected nearly 14 billion crowns from it. The proposal will also abolish the possibility of deducting paid mortgage interest from the tax base in the future.

The property acquisition tax is regulated by a legislative measure of the Senate from 2013. Previous proposals to abolish this measure and the corresponding tax in the Chamber were unsuccessful, even last year when it was proposed directly by the Senate. The opposition ODS has been repeatedly trying to abolish the tax. Most recently, this proposal was brought up last year by SPD, and the government rejected it.

Finance Minister Alena Schillerová (for ANO) told MPs today that she had given a negative opinion on previous proposals to abolish the tax for budgetary reasons, as billions of crowns would be missing from the budget. According to the minister, this tax is very unfair because only citizens pay it. For example, companies can evade it by purchasing property through buying shares in another company, and according to the minister, this cannot be legislated away.

The ability to deduct paid interest will remain for new mortgages, but only until the end of 2021. Deductions for loans provided from January 1, 2022, will no longer be possible. The government states in the justification that the proposal is in line with the government program regarding the abolition of tax exemptions and also contributes to simplifying the tax system.

"For properties acquired in the period from December 2019 to December 2021, it applies that the buyer will not pay the acquisition tax, and will simultaneously be allowed to apply deductions of interest from housing loans from the tax base," stated the Ministry of Finance.

The amendment is expected to have retroactive effect. This means that people who had the deadline for filing their tax returns until March 31, subsequently postponed by the ministry due to the pandemic until the end of August, will no longer have to pay the tax. If someone has already paid it, their money will be refunded. This applies to those who completed their registration in the cadastre during December 2019 or later.

At the same time, the government has extended the so-called time test for income from the sale of real estate not intended for personal housing from five to ten years. The extension of the time test will apply to properties acquired after January 1, 2021.